Singapore-Kunming Rail Link: A 'Belt and Road' Case Study

The Yunnan to Singapore rail link should be a showcase for the Chinese strategy, but it too faces hurdles.

By Shang-su Wu for The Diplomat

June 17, 2016

Among the various projects proposed under China’s “One Belt, One Road” (OBOR) strategy, the Singapore-Kunming Rail Link (SKRL) seems to be the most promising rail project. Since announced at the fifth summit of the Association of South East Asian Nations (ASEAN) in 1995, this project has evolved from a conventional railway to a high-speed railway (HSR) linking China’s Yunnan Province to Singapore via Laos, Thailand, and Malaysia.

In contrast to other ambitious projects connecting to South and Central Asia, the SKRL is a more feasible platform to demonstrate China’s prowess in HSR technology. Despite some disputes about intellectual property, Beijing has clearly established its huge HSR industry by building up the largest network in the world. China has also exported HSR technology to overseas markets such as Turkey and Indonesia. Unlike those lines, which are separated from China, the SKRL will directly connect with China’s existing network, enlarging the overall economic value.

Compared to other OBOR projects linked with China’s HSR network, the SKRL presents better conditions for HSR technology. While the total length of the SKRL is more than 3,000 kilometers, much longer than the ideal HSR operational range of between 200 and 1,000 km, several sections, such as the Singapore-Kuala Lumpur and Kuala Lumpur-Bangkok legs, fit in the optimal operational ranges. Furthermore, those cities with their rising economies may provide growing markets. Other HSR lines to South and Central Asia are even longer, so that potentially profitable sections, such as a Dhaka-Kolkata link, are relatively minor pieces of the whole.

Then there is the gauge issue to consider. All of the ASEAN countries along the SKRL use a narrow gauge (one meter) railway system, which is slow and has low capacity. Accordingly, the standard gauge (1.435 meter) of the Chinese HSR system will be independent from the existing rail networks, because these two gauges have distinct construction criteria. This reduces expectations for integration with existing railway networks. In contrast, India and Russia use wide gauge tracks of 1.676 meters and 1.52 meters, respectively, and OBOR HSR projects heading toward Central and South Asia could not ignore this fact. Therefore, new Chinese-built rail lines may have to fit those wide gauges, which will create a barrier when it comes to connecting with China’s own networks. This is in part a question of geopolitics as well; Moscow and New Delhi will not simply allow Beijing to exert geopolitical influence along its HSR lines. However, there is no country along the SKRL having a comparable power status that can counter China.

Despite those advantages, the SKRL is nonetheless facing its own challenges and limitations. Firstly, China’s superior global status may not be sufficient to achieve favorable deals in Southeast Asia. For example, even in the face of sanctions from Western countries after the coup in 2014, Bangkok did not kowtow to Beijing’s conditions for an HSR project. Instead, Thailand continually asked for a better deal, until the bilateral negotiations failed this March. Although the HSR construction in Laos is undergoing, most of the financial burden is on China’s shoulders. China has invested a lot in Malaysia’s rail industry — establishing a regional management center, manufacturing factory, and other facilities — but there is still no guarantee China will win out over other foreign HSR suppliers for the project linking Kuala Lumpur and Singapore. In short, regardless of the sheer gap in national power, Southeast Asian countries may not be easy partners for the SKRL.

Secondly, the SKRL may not be profitable. China’s main economic activities are concentrated in its coastal provinces; Yunnan is not an important economic center, which leaves relatively low commercial trade interests. Trade with China’s coastal areas through sea transport would be cheaper than HSR when taking into account the construction investment as well as continuous efforts to maintain tracks, especially for the precise standards of high-speed operation. And although HSR would be faster than ships, its trains — with a top speed of 350 km/hr — are much slower than commercial airplanes. As a result, passengers and high-value cargo may travel not on SKRL, but on budget aerial carriers. Yunnan Province’s considerable deposits of resources such as coal and iron ore, which are suitable for rail transport, may be able to supply Southeast Asian economies, but these exports would still have to face global competition from Australia and other sources. If the SKRL is unable to create profits, Thailand, Malaysia, and Singapore may shoulder some of the expenses, but losses from the Lao section will largely fall on China. In other words, the economic impact of the SKRL may be limited or even a net negative.

Thirdly, Beijing’s dream of technological dominance may not come true. Ideally, the entire SKRL should be equipped with Chinese HSR systems, which would allow China’s rail industry to secure commercial interests and create leverage over hosting countries thanks to a monopoly on supplying rolling stock and other necessities. However, if even one state along the SKRL, perhaps Thailand or Malaysia, chooses a non-Chinese HSR system, China’s technological dominance could vanish. The need for compatibility to efficiently run trains from different sources would force the Chinese rail company to share some technological details — the key for its dominance. If the Chinese contractor rejects cooperatin, the line’s overall efficiency would be disrupted thanks to the additional time, effort, and investment of transferring cargo from one system to another.

Finally, the SKRL will not fully solve the Malacca dilemma. The SKRL will reach the Indian Ocean in southern Thailand and the western Malay Peninsula to form an alternative to the sea lines of communication (SLOC) running through the Malacca Strait. However, HSR capacity is too little to compensate for maritime shipping, particularly when it comes to petroleum. Moreover, any one country along the SKRL could exert its sovereign right to stop rail operation. It would not be easy for China to ensure rail transport during a crisis, especially in light of the worsening Sino-ASEAN relations. Before other OBOR land transport lines are completed, the SKRL alone cannot be a solution for Beijing’s geostrategic circumstances.

The SKRL is one of the most promising projects for China’s OBOR strategy, and its impact on regional integration cannot be ignored. However, the SKRL may not ultimately fulfill China’s goals, whether railway diplomacy or geostrategic linkages.

Shang-su Wu is a research fellow in the Military Studies Program of the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University.